Fraser v. Bentel

The complaint was in the ordinary form, setting forth the making by defendants of a promissory note, the execution of a mortgage to secure the same, the plaintiff’s ownership of the note and mortgage, and the non-payment of a part of the principal, and the interest due. Copies of the note and mortgage were incorporated in the complaint. The

To this complaint the defendants demurred, and they now assign the overruling of their demurrer as error. Their contention is that the action is in. effect one for the specific performance of an agreement for the purchase and sale of real estate, and that it is incumbent on plaintiff in such action to allege and prove that the contract sought to be enforced is just and reasonable as to the defendants, and that the consideration, is adequate. (Civ. Code, sec. 3391.) That allegations showing the existence of these conditions are necessary to the sufficiency of a complaint for specific performance is not to be questioned. (See Herzog v. A. T. & S. F. R. R. Co., 153 Cal. 496 , [ 17 L. R. A. (N. S.) 428 , 95 Pac. 898 ], and cases cited.) But we are unable to agree with appellants that the case at bar is of the character claimed. It is an action to foreclose the lien of a mortgage. The defendants do not contend that the relief sought in a foreclosure suit, as such, amounts to the specific performance of a contract. But it is said that, inasmuch as this mortgage recites that it is given to secure the payment of a note for the balance of the purchase price of land, the purpose of the action is to compel the payment of such 'balance, and the plaintiff is, in reality, seeking to enforce the performance of the original agreement for the sale of the land. The fallacy in this argument lies in the failure of appellants to recognize that the original agreement for purchase and sale has'been fully exécuted. (See Bryan v. Swain, 56 Cal. 616 .) On the part of the vendor, it has been executed by the conveyance; on the part of the vendee by the payment of a part of the purchase price and the giving of a note and mortgage for the balance. In foreclosing, the plaintiff is proceeding upon the note and .mortgage, not upon the precedent contract out of which the note and mortgage arose. Herein the case differs completely from White v. Sage, 149 Cal. 613 , [ 87 Pac. 193 ], relied on by appellants. There the vendor in an executory contract of sale, having tendered a deed, sought to compel the vendee to comply with his agreement to pay the purchase price. He further sought to foreclose his vendor’s lien upon the defendant’s equitable interest under the contract. This, as the court said, was clearly a suit

The defendants answered, setting up, by way of counterclaim, that the note and mortgage were given in consideration of a conveyance of land to defendant George B. Bentel, whereby the grantors (of whom plaintiff was one) covenanted that the land was free and clear of encumbrances done, made, or suffered by them, or either of them. It is alleged that the land was, in fact, subject to an encumbrance created by the deed under which plaintiff acquired title, such encumbrance consisting of a covenant running with the land, forever prohibiting the use of firearms upon the premises conveyed. Defendants averred that the land had been depreciated in value by reason of said encumbrance to the extent of twenty thousand dollars. A second counterclaim sets forth, further, that the defendant George B. Bentel took the conveyance from plaintiff and his associates, and made the mortgage without knowledge of the encumbrance, that he had contracted to sell parcels of the land, unencumbered, to various purchasers for sums aggregating over seventy-four thousand dollars, that such purchasers had refused to carry out their contracts by reason of the aforesaid encumbrance, and that the property cannot now be sold for over forty thousand dollars.

The court found against the allegations of damage and found, in addition, that Bentel had knowledge of the restrictive provision concerning the use of firearms at, and long prior to, the execution of the mortgage, and that he expressly waived any and all objections to’the said restrictive provision.

The covenant against encumbrances, relied on by defendants in their answer, was that implied, under section 1113 of the Civil Code, from the use of the word “grant” in the conveyance from plaintiff and his associates to the defendants. Section 1114 of the same code declares that “the term ‘encumbrance’ includes taxes, assessments, and all liens upon real property.” A restrictive covenant against the use of firearms is not covered by this enumeration, and the respondent contends that the existence of the restriction in question, though it be binding upon subsequent purchasers of the land,

Inasmuch, however, as the covenant against encumbrances is merely one of indemnity (Rawle’s Covenants for Title, sec. • 188) no.more than nominal damages can be recovered on account of an encumbrance which has inflicted no actual injury upon the grantee. (Id.) Accordingly, where, - as here, the breach is set up by the defendant as a counterclaim, the defense will be of no avail without proof that the grantee has suffered damage from the alleged breach. (Thurgood v.

We think the finding was fully justified. The answer seeks to set up two elements of damage: 1. That the land as conveyed was worth twenty thousand dollars less than it would have been without the encumbrance; 2. That the defendant George R. Bentel made contracts for the resale of parts of the land, and that he lost the benefits of such contracts because the existence of the encumbrance made it impossible for him to convey to' his proposed grantees the unencumbered title upon which they insisted.

There was no proof to sustain the first element of damage claimed. The defendants showed the value of the lots remaining unsold, but failed to establish that they would have had any greater value if there had been no restriction against the use of firearms. On the contrary, the admissions of George R. Bentel himself were such as to warrant the conclusion that the restriction had no effect whatever on the value of the land.

The other element, i. e., the loss of resales,- was too remote to be allowed as an item of damages. The measure of damages for the breach of a covenant against encumbrances is, ordinarily, the amount which the plaintiff has actually expended in removing the encumbrance, not exceeding the value of the property at the time of the breach. (Rawle’s Covenants for Title, sec. 188 et seq.; 2 Sutherland on Damages, see. 622.) This rule, which has been embodied in section 3305 of our Civil Code, refers to such encumbrances (e. g., mortgages and other liens) as mgj be satisfied by the payment of money. It is not applicable to encumbrances like easements or restrictions on the use of land, which cannot be extinguished, at the will of the. owner, by the payment of any sum. In such cases the damages are based upon “the natural and proximate consequences to the plaintiff of the existence and continuance of the encumbrance.” (Rawle’s Covenants for Title, sec. 191.) “Just compensation in such eases has generally” (as is said in 2 Sutherland on Damages, sec. 627), “been estimated by the amount which the existence of the easement reduces the market value of the land.” And so, in a ease similar to the present

Concluding, as we do, that the finding on the issue of damage is supported by the evidence, -and is sufficient to sustain

The judgment is affirmed.

Angellotti, J., and Shaw, J., concurred.